QUESTION THREE ( CVP ANALYSIS BREAKEVEN & LIMITING FACTORS) The following details relate to three services provided by NMO Service: N M O ZMW ZMW ZMW Fee charged to customers for each unit of Service...

QUESTION THREE ( CVP ANALYSIS BREAKEVEN & LIMITING FACTORS) The following details relate to three services provided by NMO Service: N M O ZMW ZMW ZMW Fee charged to customers for each unit of Service 90 130 165 Unit service costs Direct materials 12 23 22 Direct labour 15 20 25 Variable overhead 12 16 20 All three services use the same type of direct labour which is paid at ZMW30 per hour. Required: i) In a period when the availability of the direct labour is limited, determine the most and least profitable use of the direct labour. (7 Marks) ii) Assuming that the company had to provide only the most profitable service how customer are required for the company to breakeven and earn profits, if Total fixed costs are ZMW168,000.00 and after tax target profit is ZMW 86,000. (Tax rate is 20%) (9 Marks) iii) Discuss Operating Leverage in the context of a company’s breaking-even point, profitability and future sustainability. (9 Marks)